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Senator Probes Rising Text Message Costs

WASHINGTON – A key member of the Senate Judiciary Committee is asking the nation’s top four wireless carriers to justify the “sharply rising rates” they charge people to send and receive text messages.

In letters to top executives at Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and T-Mobile, Wisconsin Democrat Herb Kohl said Tuesday that he is concerned that rising text messaging rates reflect decreasing competition in the wireless business.

Kohl chairs the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. His inquiry comes as European Commission regulators are threatening to impose a cap on roaming fees for text messages sent by Europeans traveling outside of their home nations, in an effort to force prices down by as much as 70 percent.

Kohl said he was concerned that consumers are paying more than 20 cents per message, up from 10 cents in 2005. This increase, he said, “does not appear to be justified by rising costs in delivering text messages,” which are small data files that are inexpensive for carriers to transmit.

Kohl said he is particularly concerned that all four of the companies appear to have adopted identical price increases at nearly the same time. “This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace,” he wrote.

Kohl also noted that these rate hikes have occurred during the industry’s recent consolidation, which has reduced the number of national wireless carriers in the U.S. to four from six. That consolidation continues, he said, as the large national wireless carriers buy out smaller, regional competitors – as evidenced most recently by Verizon Wireless’ planned acquisition of Alltel Corp. for $5.9 billion plus the assumption of $22.2 billion in debt.

Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, said it will respond to Kohl’s letter once it has had a chance to review it. AT&T said it has received the letter and will respond accordingly, and Sprint said “we look forward to responding to the Senator’s inquiry about the text messaging options we offer our customers and we will fully cooperate with his request.”

T-Mobile, which is owned by Deutsche Telekom AG, said it will fully cooperate with Senator Kohl’s requests. © 2008, YellowBrix, Inc.